On Thursday, July 31, the Department of Energy (DOE) announced it was granting $36 million toward 15 projects aimed at furthering the development of new and cost-effective technologies for the capture of carbon dioxide (CO₂) from the existing fleet of coal-fired power plants.  The 15 projects will focus on five potential carbon capture technologies, including membranes, solvents, sorbents, oxycombustion (flue gas purification and boiler development), and chemical looping.  The proportion of DOE funding for the projects ranges from 75% to 33%, with an average government share of 66% of the projected cost.

These grants, while modest in size, are good news for an industry that has been stung by recent government reversals in supporting previous clean coal partnerships.  Most notably, in December 2007, DOE announced it would withdraw from its five-year partnership with the FutureGen Alliance, an international consortium of private companies, to develop a state-of-the-art model clean-coal energy facility in the United States.  In June 2008, DOE announced it would make $290 million in targeted funds available for commercial-scale CCS projects under a “restructured” FutureGen Project, only to see much of the funding held hostage to FY09 appropriations deadlocks (DOE officials have indicated that they should still be able to award at least $145 million using FY08 dollars.).

Most recently, NRG announced that it was discontinuing plans for a utility-scale clean coal plant after the New York Power Authority (NYPA) withdrew from its strategic alliance.  The uncertain investment environment caused by such government reversals has not halted private investment in clean-coal technology, but it is likely to slow the pace of investment and innovation in the US, particularly given the lack of progress on domestic cap-and-trade climate legislation and EPA’s recent decision to postpone independent action on climate change regulation.

With this rocky history in mind, DOE’s release of $36 million has at least symbolic value.  Given the US’s compelling interest in developing clean-coal technologies and its history as a leader in technological innovation, however, it is ironic that while the US has taken this small step toward funding carbon capture research, it is the Norwegian government that is taking the giant leap toward funding a FutureGen-like CCS facility in Mongstadt, Norway.  It is also both fitting and sad, then, that Norway’s Foreign Minister has characterized the state-supported facility as Norway’s “Apollo Project” for Energy.

For further information about this topic, please contact Akin Gump.